P1.2-B chopper deal ‘fixed’

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OLDER BIRD Documents obtained by The Times show that the Department of National Defense had requested that they be allowed to enter into an “emergency procurement” for various aircraft, including the 21 UH-1H or Huey helicopters, but what were delivered were the older UH-1D variant.

OLDER BIRD
Documents obtained by The Times show that the Department of National Defense had requested that they be allowed to enter into an “emergency procurement” for various aircraft, including the 21 UH-1H or Huey helicopters, but what were delivered were the older UH-1D variant.

THE contract for the procurement of 21 refurbished UH-1 or Huey helicopters to the tune of P1.2 billion was “tailor-fitted” for a “favored” bidder who, after three failed bid attempts, eventually managed to bag the deal through negotiation with officials of the Department of National Defense (DND), documents showed on Monday.

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Documents obtained by The Manila Times showed that as early as June 2012, the DND had requested the Government Procurement Policy Board (GPPB) to allow it to enter into “emergency procurement” for various aircraft, including the 21 Huey helicopters.

But in a letter to Defense Secretary Voltaire Gazmin dated Sept. 28, 2012, Budget Secretary Florencio Abad, who chairs the GPPB, informed the DND that their request was denied, saying the agency should make the acquisition through competitive biddings.

According to The Times source who provided voluminous documents that are related to the “onerous” and “disadvantageous” aircraft procurement, the DND then conducted three successive biddings, which all failed.

“The project was designed for negotiated procurement from the beginning. DND had been negotiating with Rice Aircraft Services Inc. (RASI) from the start. The Terms of Reference was prepared specially for Rice as evidenced by inclusion of the required Structural Life Extension Program (SLEP) as stated on pages 27 and 32 of the TOR. On both pages, you will see that there was a requirement that the helicopters ‘must have undergone a SLEP which has been successful and has a verifiable history, with complete documentation from an authorized repair facility,’” the source pointed out.

The Times also obtained a copy of the TOR.

Records showed that each aircraft cost around P54 million, as indicated in various “request[s]for payment” addressed to Susan Mariano, International Trade Department head of the Land Bank of the Philippines. The requests were made by Col. Glenn Cruz of the Armed Forces of the Philippines Quarter Master Service.

RASI and its Canadian partner Eagle Copters Ltd were awarded the P1.2-billion contract in December 2013. RASI participated in the three biddings required by the GPPB. In the end, it won the contract.

“RASI is the only one that can comply with this requirement because UH 1D was the only one that underwent this program because of its old age. This program is not necessary. Other models operate perfectly without SLEP. SLEP is [required]merely to avoid corrosion. This corrosion problem should not be a problem because our PAF [Philippine Air Force] has credible maintenance facility and personnel,” The Times source explained.

In his letter to Gazmin, the DBM chief repeatedly referred to the 21 refurbished choppers as “UH-1H” or Hueys, far from actual deliveries of the older and “obsolete” UH-1D model.

In the same letter with accompanying resolution by the GPPB, it was stated that some of the helicopters should be “mission-capable”.

All eight aircraft (not nine as previously reported) that have been delivered to the PAF hangar had “compatibility” and safety issues.

The UH-1D is older than the UH-1H. The UN-1D’s manufacturer, Dornier, has long folded up and no spare parts are being manufactured specifically for the UH-1D.

In the absence of spare parts, the supplier allegedly fitted Bell spare parts which were specifically designed for the UH-1H, thus there is always an issue of safety, The Times source said.

In an undated letter signed by Robert A. Rice, president of RASI, to Defense Undersecretary for Finance, Munitions and Materiel Fernando Manalo, chairman of the Special Bids and Awards Committee 1 and of the Negotiating Committee, the supplier admitted that the parts required by the DND in the TOR are already “obsolete and out of date.”

Rice said “RASI has made the necessary additions to incorporate all eligible and OEM approved part numbers. These additions are the equivalent, if not superior, to the part numbers that were previously listed in the TOR.”

“RASI’s objective is to deliver 21 UH-1 helicopters with the ‘latest and greatest’ components that will prove to be beneficial to the Philippine Air Force,” his letter to Manalo read.

The source, who was privy to the questionable chopper deal, said the joint venture of RASI and Eagle Copters Ltd defrauded the government by submitting the Statement of Compliance during the negotiation, stating that they will comply with all requirements for the procurement of the 21 refurbished UH-1H.

“This act deprived the government the opportunity to negotiate the project with a qualified supplier who can deliver superior quality of Bell UH-1H instead of UH-1D… The Joint Venture companies also deprived the PAF the chance to acquire better helicopters that are necessary to carry on with its missions and enhanced its capability as part of the AFP Modernization Program,” the source added.

In Malacañang, Presidential Communications Secretary Herminio Coloma Jr. said they have inquired with the DND about the chopper “fiasco” and was promised that the department is “keenly looking” at it, quoting DND Public Information Office chief, Peter Paul Galvez.

But The Manila Times source maintained that the DND should stop the ongoing acceptance of three of the aircraft “before it’s too late and [before the supplier gets]paid.”

Senate probe
The P1.2-billion helicopter deal should be investigated by the Senate, Sen. Joseph Victor Ejercito said.

Estrada, a member of the Senate Committee on National Defense and Security, was referring to the report published by The Timeson Monday about the defective helicopters.

“This [deal]means that we spent P1.2 billion for choppers that can’t be used because the model is already obsolete,” Ejercito said in an interview.

If there were “errors” in the P1.2-billion contract, the defense department is mandated to terminate the contract, a department official said also on Monday.

“Well, the supplier must comply with what is mandated by the contract, we are also mandated to terminate the contract if we found there are [errors]. We are doing what we are supposed to do to see to it that no delivery is accepted unless it complies with what is stated,” Defense Undersecretary Manalo said in a news briefing.

While pointing out that DND officials did not violate any regulation in the procurement law in the acquisition of the helicopters, Manalo added, “If there is an agency that will run after us, then I will accept my fate.”

He said the procurement of 21 helicopters is in the implementation stage and 21 helicopters have been delivered.

But Manalo also explained that delivery is different from acceptance.

“The helicopters were delivered and since [they are of the]knockdown [kind], it’s part of the contract [that we make]the supplier assemble the helicopters and that is not [acceptance]. The interpretation is if [they are]not accepted [they cannot be paid for]as if [they have not been]delivered,” he said.

In the same briefing, Defense Assistance Secretary for Acquisitions Installations and Logistics Patrick Velez also admitted that the contract was not for UH-1D, but for UH-1 and officials deliberately did this to entice more bidders.

Manalo said payment for the helicopters will only be made upon delivery and acceptance of the aircraft.

He added that based on his personal assessment, the supplier must be able to deliver everything not later than April 15, 2015.

“Otherwise, we have reasons to terminate the contract, in addition to that, the supplier must pay maximum liquidated damage amounting to P120 million. The aircraft must be delivered and accepted and they still have to pay liquidated damage,” Manalo said.

Liquidated damage, he also explained, is the damage paid by the supplier for delayed delivery.

WITH REPORTS FROM JEFFESON ANTIPORDA AND FERNAN MARASIGAN

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20 Comments

  1. See, with the previous article, I just thought that the writer was being ignorant and being misinformed by his sources. Now it’s clear that there’s an agenda behind this type of ‘reporting’.

    To reiterate the facts:

    1) The DND, due to dangerously depleted fleet of serviceable helicopters in the PAF, decided to acquire refurbished UH-1 model helicopters a couple years ago. This decision was based on the fact that the PAF is a long time user of the helicopter and thus it wouldn’t require retraining for pilots to be able to use newly acquired helicopters as soon as possible. That they chose to get refurbished units is a necessity of reality: the UH-1 and its variants has been out of production for many years now.

    2) The DND posted a bid for this requirement as far back as 2008 (Project Nr: AFPMP-PAF-01-07-012), which at the time was for 10 units of helicopters with an authorized budget of Php 400 million. This acquisition did not pan out, so the PAF’s UH-1 fleet continued to suffer. Then in 2012, the acquisition project was brought back up again, this time with a increased requirement for 21 units, and a subsequently bigger budget. Understandable since the need for more airframes became even more pressing. This particular project led to three rounds of public bidding being announced. Each of these bids failed because of a lack of interested bidders. The only company that entered was Rice Aircraft from the U.S.A. They had the capabilities to deliver and the aircraft, but they kept getting disqualified due to not accomplishing the required documents properly (a constant problem with many of the military’s acquisition projects, stemming for bureaucratic procedures that could do with some significant streamlining and improvement). It was because of these failures that the DND finally got permission from the DBM to go into the ‘negotiated procurement’ method of acquisition, as is allowed by government procurement laws. This is what finally led to the purchase of the new UH-1 helicopters delivered recently.

    ) The helicopters in question are NOT “old and obsolete” as the articles posted on this website alleges. First of, the units delivered to the PAF are German-built Dornier UH-1Ds, which are actually license-produced versions of the Bell UH-1H. The ‘D’ in this designation stands for ‘Deutschland’ or Germany. In fact, they were produced around the same time as the Bell UH-1H
    s (1967-1980s). They are not, older than the UH-1Hs that the PAF has long operated.

    Second off all, the UH-1 family of helicopters is still used by many countries to this day, both for military and civilian purposes. This is why there is continued support for the UH-1 series from Bell Helicopter and other companies. Indeed Bell offers logistical support and upgrade kits for these older helicopters, notably the Huey II upgrade, of which the PAF received training and certification to undertake such upgrades more than a decade ago. (See: http://www.bellhelicopter.com/en_US/SupportServices/Customizing/HelicopterRefurbishment/Helicopter_Refurbishment.html) Thus, spare parts are indeed still being produced for these helicopters.

    In fact, the recent pictures of the newly delivered helicopters indicates that they have indeed undergone significant upgrades, seemingly to the newer Huey II standard. They are seen featuring additional BLR Aerospace FastFin and strake kits installed. (See: http://goo.gl/Zr56Cw) These upgrades mean significantly improved performance compared to older model UH-1Hs.

    4) Concurrent to this purchase of refurbished helicopters is the purchase of brand new Bell 412EPI helicopters from Bell Canada, under the Combat Utility Helicopter program. These helicopters are newer, twin-engined, four-bladed successor models to the UH-1 series and are currently in active production. These airframes are expected to start to be delivered some time later this year, though because they need to be newly-built, the first delivery will only be two units at first, with more delivered as they are completed.

  2. RASI or Rice Aircraft Services, Inc is a known scammer and fraudster in the US. Why did the DND ignore that fact?

    articles.latimes. com/1989-08-17/business/fi-912_1_counterfeit-parts

    Guilty Pleas Entered in Plane Parts Scandal

    August 17, 1989|GREGORY CROUCH | Times Staff Writer

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    An Orange County consultant was charged with conspiracy and officials at two Los Angeles area companies were implicated in a scheme that resulted in the placement of counterfeit parts inside military and commercial planes, according to court documents filed Wednesday in Seattle.

    The scheme was outlined in federal court as Bruce J. Rice, president of Rice Aircraft Inc of Hauppauge, N.Y., pleaded guilty to one count of conspiracy and two counts of mail fraud. The firm pleaded guilty to one count each of conspiracy and mail fraud.

    Assistant U.S. Atty. Bruce Clark said no accident had been attributed to the parts, which were rivets and other fasteners sold between 1977 and 1988.

    One way Rice Aircraft was able to sell its used parts was through a kickback scheme, according to court documents. The company allegedly paid employees of competitors to get advance looks at their bids on important projects. Rice Aircraft would take that information and underbid rival firms to win significant contracts.

    FOR THE RECORD
    Los Angeles Times Friday August 18, 1989 Home Edition Business Part 4 Page 2 Column 3 Financial Desk 1 inches; 33 words Type of Material: Correction
    Parts scandal–The individuals at Hi-Shear Corp. in Torrance and Deutsch Fastener Corp. in Lakewood who allegedly took kickbacks in a parts counterfeiting scheme as described in an Aug. 17 article do not currently work for those firms.

    Kickbacks Charged

    Richard K. Ohlman, a Mission Viejo parts broker, was charged Wednesday for allegedly conspiring in 1982 with Rice and Rice Aircraft to pay kickbacks to employees of Boeing Co.

    Officials at Hi-Shear Corp. in Torrance and Deutsch Fastener Corp. in Lakewood–both parts makers–allegedly accepted kickbacks from Rice, according to the U.S. Attorney’s office.

    Ohlman, 70, declined to comment Wednesday. If convicted, he faces up to five years in jail and a $5,000 fine.

    Employees at Hi-Shear and Deutsch Fastener were not charged because they had agreed to cooperate as witnesses against Rice, Clark said. He added that employees at the two firms were not acting at the direction of management. Neither company has been accused of wrongdoing.

    Besides getting bid information, the employees allegedly supplied Rice Aircraft with test reports that falsely indicated the counterfeit parts had met safety specifications.

    Rice Aircraft allegedly took used or damaged nuts, bolts and rivets and had them stripped and replated. It then sold the parts as new under the original manufacturer’s trademark, according to the government. Among the airlines that purchased the parts were United, American, TWA, and Pan Am.

  3. Corruption, incompetence, ignorant and just plain stupidity. This is treasson, this oficials should be lined upagaist the wall and shot like the dogs that they are. Folks better start learning Chinese language becasue here comes the greedy China taking over this f**** up country!

  4. Vicente Penetrante on

    Only Pres. Aquino can blame, but his forefinger is tied and cannot point when anomalies involve his KKK.

  5. This is one of the 21 chopper bought for P1.2 billion

    Feb. 04, 2015, Camp Bancasi, Butuan City – The Philippine Air Force (PAF) started its investigation into the Huey (UH-1H) Helicopter that rolled over while it was about to take off on Wednesday inside the 4th Infantry (Diamond) Division headquarters helipad at Camp Edilberto Evangelista, Patag, Cagayan de Oro City.

    The UH Huey helicopter was about 10 feet above the ground and about 500 meters away when it suddenly lost power and crashed inside the camp’s golf course.

  6. THEN: Mike Arroyo was charged for graft for selling 3 second hand choppers passed as “new” to the PNP in 2009 at a total cost of P104.985 million. NOW: The PNoy administration purchased 21 antique Huey helicopters for P1.2 billion. This is how the Tuwid na Daan is clearly defined.

  7. Samuel Santos on

    Let PNoy ride in one of this helicopters . . . at makita natin kung hindi sya pupulutin sa kangkongan. LOL

  8. Can afford naman pala para bumili ng brand new, eh, bakit ang binili ay refurbished pa. Parang ang patakaran ng bidding ay kung sino ang highest kickback will travel. Huwag naman paglaruan angbuhay ng mga kasundaluhan na gagamit niyang second hand helicopters.

  9. Boy, oh boy, We are not done yet getting into the truth and apology in the PNP/SAF Commando slaughter, here comes another huge, worth Pl.2 billion headache of PNoy. “if it rains, it pours” as the saying goes. PNoy will be sweating much these days and must be scratching his balls all day long. PNoy’s KARMA is in full swing.

  10. If true, units should be recalled and be replaced with a better and brand new one. There is a pending issues on the West Philippine Sea, BIFF, ASG and and other terrorist groups. we should be ready for them. Do not allow another soldiers be fallen!

  11. This looks like an Arroyo era type deal. Maybe they should have just contracted Mike Arroyo. At least they would have helicopters that could fly.

    • apolonio reyes on

      E. G. Festin, Kitang-kita naman kung saan tutungo ang ” Tuwid na Landas “, sa MAMASAPANO.E. G. sa Mamasapano patay kangf bata ka. Mabuti pa nga yuon binili na 2nd hand ng PNP na kay First Gentelman umana at least nagagamit at lumilipad. Itong HU-1D, heli Deathcopter kaya walang helicopter mapadala ang AFP para tulungan ang 44 SAF Fallen Heroes kundi may madadagan [pa ang patay ang piloto ng Air Force, di ba FC? Sino kaya ang Ma SISISI NI CC, DI NA PWEDE SI GMA PAGKA’T UNDER SA ILONG NYA NANGYARI ANG PAG-LUSTAY NG P1.2 B SA KABAN NG BAYAN, DI BA E.C?

  12. Hey Mr. Sr. Reporter, you are showing your ignorance on this issue again. Listen once more. I will say this just one more time. The Dornier UH-1D, of which some Rice supplied airframes are based on this model, is merely a German licensed copy of the UH-1H, and built in the same timeframe. The two models are exact copies. Stop lying to the people.

    Do you even know what SLEP is? That means zero timing the airframe. Why wouldn’t you require this on older helos that have been subjected to vibration. If the DND did not require SLEP, that would be criminal in my mind. You can’t SLEP an aircraft during normal maintenance. You have to strip it down to its basic structure to check for fatigue cracks.

    Please stop with the lies already.

    • FYI Louis, the paid hack of RASI……

      This is in regards to the PAF procurement of UH-1 helicopters. There’s a major issue that needs to be addressed with acquiring refurbished UH-1 helicopters. Namely, is the PAF getting Bell UH-1H helicopters, which they have had years of experience operating, OR, are they getting the Dornier UH-1D(Discontinued)???
      The Dornier UH-1D (Discontinued) is a copy of the original Bell UH-1H “Huey” helicopters, which are flown by many countries around the world. They look similar on the outside, but that is where the similarity ends, and the problems begin.
      Dornier stopped supporting their D models back in the 1980s, long before they even went out of business in 2008. This will be a BIG problem for PAF if they get suckered into buying the D models.
      No OEM or Bell Helicopter support – UH-1Ds are orphaned systems, there will be no support available from Dornier(since they’re not around), or from Bell Helicopters. Making parts required to properly maintain the UH-1Ds is difficult and will be very expensive to source.
      Lack of ongoing publication updates – Dornier has long discontinued providing service publication for the UH-1Ds.
      If you’re in Aircraft Maintenance, then regularly updated publications are a very important tool that all air crew needs.
      Parts similarity with aircraft having considerable differences. The potential for confusion and mixing of components and airframe parts is substantial that would result in fatally catastrophic system failures.
      The BELL UH-1H can be upgraded to the HUEY Plus, providing enhanced operational capabilities. The D models can’t be upgraded (at least not with any factory authorization or safety approvals).
      If the PAF is trying to save some money with acquisitions, the D models are not the way to go. The costs of maintaining them would be more than what they paid for, and the REAL potential costs in lives of PAF air crew can never be justified for monetary reasons.
      Give the PAF Air crew equipment that will help them accomplish their mission with out endangering their lives, and use Philippine Tax payer money wisely.

      It is easy to say that one aircraft is better than another, but what we are talking about is a contract specification. The fact of the matter is your argument that “ the UH-1D is regarded as the best UH-1 ever built”, is moot, the specifications are for commonality in the fleet. You may be ill informed, but the fleet owned by the PAF is U.S. Built UH-1H rotorcraft.

      When you ask what does the FAA or CAB have to do with anything, it has everything to do with it; a certification agency is who put the engineering to the test for the -703 engine installation. The “ Huey plus” as you put it, is actually a UH-1H Plus coming from anyone but Bell. Huey is a Bell trademark, that is one of 7000 aircraft built, not under license by another manufacturer like Dornier, Agusta, of Fiji. How long have the Doniers been retired by the German military? Is there the equivalent certification agency who kept up with the safety and operational issues? On the fin spar modification, are you saying they are upgraded with a spar that addressed the cracking issues, and was this a Dornier fix or something else? Dornier instituted the SLEP program for the UH-1D, how do you maintain it? You do remember the company that built the aircraft you say is the best…well they are out of business. Where do you get parts again, you mentioned Bell…does Bell agree with that assertion? How would you feel as a mechanic maintaining two aircraft, that by your own admission are different but look the same? If I am looking from a safety and maintainability standpoint, I want my fleet uniform or totally different models, I don’t want aircraft that look exactly the same but are different, would anyone? I am not saying there is anything wrong with a UH-1D in and of itself, but the FACTS are it is not a UH-1H, it was built under license by other than Bell, its parts are not all interchangeable, its engine was also built under license by other than Honeywell, the list could go on and on. If you are going to compare aircraft, let’s compare apples to apples…this is after all what the PAF wants, correct?